WHAT IS MEDICARE?

Medicare is a government-run insurance program for people age 65 and older, people on Social Security disability for two or more years, and people with end-stage renal disease (ESRD).

The program was signed into law in 1965 and as been modified several times over the years, most significantly by the Balanced Budget Act of 1997, which created Medicare Advantage Plans, and the Medicare Modernization Act of 2003, which created Medicare Part D Prescription Drug Plans.

There are two parts to “Original Medicare”: Medicare Part A Hospital Coverage and Medicare Part B Medical Coverage. Unfortunately, Medicare alone is not enough, so most people choose to protect themselves by purchasing a Medicare supplement or signing up for a Medicare Advantage plan.

WHAT DOES MEDICARE PART A COVER?

Medicare Part A is known as your “hospital coverage.”

In general, Part A covers: 

• Inpatient hospital care
• Skilled nursing facility care
• Nursing home care (as long as custodial care isn’t the only care you need)
• Hospice
• Home health services

HOW DO I GET MEDICARE PART A AND HOW MUCH DOES IT COST?

During your working years, you pay 1.45% of each paycheck (and that amount is matched by your employer) to pay for Medicare Part A. You earn “premium free” Part A by contributing to the Medicare program for 40 quarters (the equivalent of 10 years) or being married to someone who has. Individuals who did not contribute to the Medicare program for the required length of time can purchase Part A directly from the government.

Generally, Medicare Part A starts automatically when you turn 65 if you’re already receiving Social Security. If you’re not yet receiving Social Security at age 65, you can sign up for Medicare Part A at your local Social Security office. Individuals who have been on Social Security Disability for two years or who have been diagnosed with End-Stage Renal Disease (ESRD) can also qualify for Part A.

About 99 percent of Medicare beneficiaries do not have a Part A premium since they have at least 40 quarters of Medicare-covered employment.

Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities pay a monthly premium in order to voluntarily enroll in Medicare Part A. Individuals who had at least 30 quarters of coverage or were married to someone with at least 30 quarters of coverage may buy into Part A at a reduced monthly premium rate, which will be $278 in 2023. Certain uninsured aged individuals who have less than 30 quarters of coverage and certain individuals with disabilities who have exhausted other entitlement will pay the full premium, which will be $506 per month.

WHAT DOES MEDICARE PART B COVER?

Medicare Part B is known as your “medical coverage.”

Part B covers 2 types of services

• Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.
• Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best.

You pay nothing for most preventive services if you get the services from a health care provider who accepts assignment.

Part B covers things like:

• Doctor visits (both in and out of the hospital)
• Outpatient surgery
• Clinical research
• Ambulance services
• Durable medical equipment (DME)
• Mental health (Inpatient, Outpatient, Partial hospitalization
• Getting a second opinion before surgery
• Limited outpatient prescription drugs

HOW DO I GET MEDICARE PART B AND HOW MUCH DOES IT COST?

Some people automatically get Medicare Part B (Medical Insurance) when they turn 65, and some people need to sign up for Part B. Learn how and when you can sign up for Part B.

If you don’t sign up for Part B when you’re first eligible, you may have to pay a late enrollment penalty.

How much does Part B cost?

Most people will pay the standard premium amount. If your modified adjusted gross income is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified adjusted gross income reported on your IRS tax return from 2 years ago. This is the most recent tax return information provided to Social Security by the IRS.

The standard Part B premium amount in 2023 is $174.70 (up from $164.90 in 2023). Most people will pay the standard Part B premium amount. If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you’ll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium.

The total Medicare Part B premiums for high income beneficiaries for 2024 (based on 2022 income) are shown in the following table:

Social Security will contact you if you have to pay Part B-IRMAA, based on your income. The amount you pay can change each year. If you have to pay a higher amount for your Part B premium and you disagree (for example, if your income goes down), you can appeal your IRMAA determination.

Late enrollment penalty:

In most cases, if you don’t sign up for Part B when you’re first eligible, you’ll have to pay a late enrollment penalty for as long as you have Part B. Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it. Also, you may have to wait until the General Enrollment Period (from January 1 to March 31) to enroll in Part B, and coverage will start July 1 of that year.

Avoid the penalty
If you miss your 7-month Initial Enrollment Period, you may have to wait to sign up and pay a monthly late enrollment penalty for as long as you have Part B coverage. The penalty goes up the longer you wait. You may also have to pay a penalty if you have to pay a Part A premium, also called “Premium-Part A.”  Learn more about how to avoid late enrollment penalties.

When your coverage starts

The date your coverage starts depends on which month you sign up during your Initial Enrollment Period. Coverage always starts on the first of the month.

If you qualify for Premium-free Part A: Your Part A coverage starts the month you turn 65. (If your birthday is on the first of the month, coverage starts the month before you turn 65.)

Part B (and Premium-Part A): Coverage starts based on the month you sign up:

Signing up for Premium-free Part A later

You can sign up for Part A any time after you turn 65. Your Part A coverage starts 6 months back from when you sign up or when you apply for benefits from Social Security (or the Railroad Retirement Board). Coverage can’t start earlier than the month you turned 65.

NOTE about Health Savings Accounts (HSAs)

After your Initial Enrollment Period ends, you can only sign up for Part B and Premium-Part A during one of the other enrollment periods.

Between January 1-March 31 each year (General Enrollment Period)

You can sign up between January 1-March 31 each year. This is called the General Enrollment Period. Your coverage starts the month after you sign up. You might pay a monthly late enrollment penalty, if you don’t qualify for a Special Enrollment Period.

Get details about the late enrollment penalties.

Special Situations (Special Enrollment Period)

After your first chance to sign up (Initial Enrollment Period), there are certain situations when you can sign up for Part B (and Premium-Part A) without paying a late enrollment penalty. A Special Enrollment Period is only available for a limited time. If you don’t sign up during your Special Enrollment Period, you’ll have to wait for the next General Enrollment Period and you might have to pay a monthly late enrollment penalty.

Special Enrollment Periods for Part A & Part B

Check my specific situation to find out when to sign up.

Source: Medicare.gov

WHAT TYPE OF GAPS EXIST IN MY MEDICARE COVERAGE?

You’ve paid for Medicare A all your life, and you pay a monthly premium for Medicare Part B when you receive it, but Medicare still doesn’t cover all of your medical expenses…far from it. Your Part A hospital coverage and Part B medical coverage have some significant gaps, and your prescription drug coverage needs to be purchased separately. Below is some information about your cost-sharing requirements under Original Medicare.

Part A costs if you have Original Medicare

Medicare Part A covers the cost for inpatient hospital or mental health facility stays, skilled nursing facilities, home health care, and hospice. However, there are some pretty significant cost-sharing requirements. These gaps in your coverage can easily cost tens of thousands of dollars. To limit their out-of-pocket exposure and protect themselves financially, most people choose to purchase a Medicare Supplement or sign up for a Medicare Advantage plan.

The Medicare Part A inpatient hospital deductible that beneficiaries pay when admitted to the hospital will be $1,600 per benefit period in 2023. The Part A deductible covers beneficiaries’ share of costs for the first 60 days of Medicare-covered inpatient hospital care in a benefit period. Beneficiaries must pay a coinsurance amount of $400 per day for the 61^st through 90^th day of hospitalization in a benefit period and $800 per day for lifetime reserve days. For beneficiaries in skilled nursing facilities, the daily coinsurance for days 21 through 100 of extended care services in a benefit period will be $200.

• Hospital inpatient stay
  • $1,600 deductible for each benefit period.
  • Days 1–60: $0 coinsurance for each benefit period.
  • Days 61–90: $400 coinsurance per day of each benefit period.
  • Days 91 and beyond: $800 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime).
  • Beyond lifetime reserve days: all costs.
  • Note: You pay for private-duty nursing, a television, or a phone in your room. You pay for a private room unless it’s medically necessary.

• Mental health inpatient stay
  • $1,600 deductible for each benefit period.
  • Days 1–60: $0 coinsurance per day of each benefit period.
  • Days 61–90: $400 coinsurance per day of each benefit period.
  • Days 91 and beyond: $800 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime).
  • Beyond lifetime reserve days: all costs.
  • 20% of the Medicare-approved amount for mental health services you get from doctors and other providers while you’re a hospital inpatient.
  • Note: There’s no limit to the number of benefit periods you can have when you get mental health care in a general hospital. You can also have multiple benefit periods when you get care in a psychiatric hospital. Remember, there’s a lifetime limit of 190 days.

• Skilled nursing facility stay
  • Days 1–20: $0 for each benefit period.
  • Days 21–100: $200 coinsurance per day of each benefit period.
  • Days 101 and beyond: all costs.

• Home health care
  • $0 for home health care services.
  • 20% of the Medicare-approved amount for durable medical equipment.
• Hospice care
  • $0 for hospice care.
  • You may need to pay a copayment of no more than $5 for each prescription drug and other similar products for pain relief and symptom control while you’re at home. In the rare case your drug isn’t covered by the hospice benefit, your hospice provider should contact your Medicare drug plan to see if it’s covered under Part D.
  • You may need to pay 5% of the Medicare-approved amount for inpatient respite care.
  • Medicare doesn’t cover room and board when you get hospice care in your home or another facility where you live (like a nursing home).

Source: https://www.medicare.gov/your-medicare-costs/costs-at-a-glance/costs-at-glance.html#collapse-4808

Part B costs if you have Original Medicare

Medicare Part B covers doctor visits both in and out of the hospital and a lot of other outpatient services, including outpatient surgeries, labs and X-rays, home health services, durable medical equipment, and more. The problem is that you pay 20% of the bill for these services with no out-of-pocket limit, and you could pay more if your doctor doesn’t “accept assignment.” A Medicare Supplement or Medicare Advantage plan can fill in some of these gaps and limit your cost-sharing exposure.

• Part B annual deductible:
  • You pay $226 per year for your Part B deductible (down from $233 in 2022).

• Clinical laboratory services:
  • You pay $0 for Medicare-approved services.

• Home health services:
  • $0 for home health care services.
  • 20% of the Medicare-approved amount for durable medical equipment.

• Medical and other services:
  • You pay 20% of the Medicare-approved amount for most doctor services (including most doctor services while you’re a hospital inpatient), outpatient therapy, and durable medical equipment.

• Outpatient mental health services
  • You pay nothing for your yearly depression screening if your doctor or health care provider accepts assignment.
  • 20% of the Medicare-approved amount for visits to a doctor or other health care provider to diagnose or treat your condition. The Part B deductible applies.
  • If you get your services in a hospital outpatient clinic or hospital outpatient department, you may have to pay an additional copayment or coinsurance amount to the hospital. This amount will vary depending on the service provided, but will be between 20-40% of the Medicare-approved amount.

• Partial hospitalization mental health services:
  • You pay a percentage of the Medicare-approved amount for each service you get from a doctor or certain other qualified mental health professionals if your health care professional accepts assignment.
  • You also pay coinsurance for each day of partial hospitalization services provided in a hospital outpatient setting or community mental health center, and the Part B deductible

• Outpatient hospital services
  • You generally pay 20% of the Medicare-approved amount for the doctor or other health care provider’s services, and the Part B deductible applies.
  • For all other services, you also generally pay a copayment for each service you get in an outpatient hospital setting. You may pay more for services you get in a hospital outpatient setting than you would pay for the same care in a doctor’s office.
  • For some screenings and preventive services, coinsurance, copayments, and the Part B deductible don’t apply (so you pay nothing).

WHAT IS MEDICARE PART D AND HOW MUCH DOES IT COST?

Medicare Parts A and B, also known as Original Medicare, don’t provide coverage for most prescription drugs. To get help with the cost of your medications, you’ll need to purchase a Medicare Part D prescription drug plan.

Part D drug coverage can be purchased as a stand-alone plan to accompany Medicare + a supplement or can be incorporated into a Medicare Advantage plan. Either way, there are a lot of options. And while there are a number of similarities between many of the drug plans offered, there are also some factors to consider when deciding which plan is best for you, including the plan’s drug formulary, the monthly premium, the copayments and/or coinsurance you’re required to pay at the pharmacy, and the reputation of the insurance company.

Unlike a Medicare supplement plan, you can change Part D plans annually during the Annual Election Period (AEP) without having to qualify for the coverage.

Part D premiums by income

The chart below shows your estimated 2024 prescription drug plan monthly premium based on your income as reported on your IRS tax return from 2 years ago and last year. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium.

Social Security will contact you if you have to pay Part D-IRMAA, based on your income. The amount you pay can change each year. If you have to pay a higher amount for your Part D premium and you disagree (for example, if your income goes down), you can appeal your IRMAA determination.

The extra amount you have to pay isn’t part of your plan premium. You don’t pay the extra amount to your plan. Most people have the extra amount taken from their Social Security check. If the amount isn’t taken from your check, you’ll get a bill from Medicare or the Railroad Retirement Board. You must pay this amount to keep your Part D coverage.

Get your premium automatically deducted

Contact your drug plan (not Social Security) if you want your premium deducted from your monthly Social Security payment. Your first deduction will usually take 3 months to start, and 3 months of premiums will likely be deducted at once.

After that, only one premium will be deducted each month. You may also see a delay in premiums being withheld if you switch plans. If you want to stop premium deductions and get billed directly, contact your drug plan.

Medicare Disclosure

We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

JME INSURANCE AGENCY IS NOT CONNECTED WITH OR ENDORSED BY THE UNITED STATES GOVERNMENT OR THE FEDERAL MEDICARE PROGRAM.R THE FEDERAL MEDICARE PROGRAM.